The best compensation plans benefit everyone: People receive compensation that is fair and equitable, which helps maintain a positive workplace culture, and your organization has a sustainable budget, AKA no last-minute surprises.
But how do you get there? Read below to discover more benefits to establishing an informed, responsible compensation plan and how to start building one today.
Before diving into how to build an informed, responsible compensation plan, it’s important to know the why behind it.
While compensation planning isn’t a one-size-fits-all process, there are common steps you can take along the way to deliver – and sustain – a well-rounded plan. In turn, your strategy will be backed by data and will benefit both you and your people.
To create an informed compensation plan, you can sift through spreadsheets filled with information like hiring dates, employee compensation, competitive pay for the current market, and raise eligibility. Or you can not do that, and instead use a people operations platform. Doing so requires you to:
Involve Your Managers
With a modern people operations platform, you can give managers access to data to help make informed decisions about employee compensation and promotions during every review period. When managers have access to the right data, they can:
Making all of this information available at the click of a button empowers your leaders to make faster, data-backed decisions during compensation reviews that align to your company’s broader plan.
With the right access to data, your leaders will never have to spend more than a few clicks searching for info again. Everything from employment history to current progress plans are visible in ChartHop.
Consider DEIB Initiatives
Within your people operations platform you can review hiring, compensation, employee, and performance data to identify any trends or opportunities within your compensation plan.
Here are some suggestions on where to start as you begin reviewing your data:
Analyzing this data will help you evaluate the processes you have in place and create a more positive employee experience.
Communicate Your Plan
Finally, developing an informed compensation plan also means informing your employees of it once completed. This transparency is crucial, since employees need to know if and when they are eligible for a raise, how much it could be, and the extent to which it’s tied to their performance and the market.
Creating an informed compensation plan is just one part of the equation. You also need to plan responsibly.
So what does that strategy look like? A responsible compensation plan is one that accounts for employee retention (whether that’s through competitive pay, a robust rewards system, or strong benefits) as well as future workforce planning to leave room for various changes to the team.
To create a responsible compensation plan, you need to:
No more “what ifs” when it comes to team planning. With ChartHop, you can visualize your headcount – within a budget – to ensure you hire the right people.
Knowing what to do is one thing, actually putting those ideas into action is another. The following tips from People leaders who have delivered on the goal of more informed and responsible compensation planning can help:
For Giuliana Zara, Head of People at Aper, establishing a clear compensation plan started by building career levels and salary bands. This allowed her team to have a defined approach rather than managing compensation on a role-by-role basis, which makes it difficult to plan ahead and to set expectations for employees.
Next, she communicated the need for a defined plan – and the benefits of having one – to leaders. This communication helped avoid resistance once the company rolled out the new plan and ensured that everyone from the top down was aligned on how to actually execute on the plan. As a bonus, talking to leaders also helped the People team understand each team’s needs and prioritize goals based on a budget.
Communicating your compensation plan doesn’t just start and stop with leadership – you also need to share details with employees. This type of transparency proved essential to Karen Kuhn in her role as Senior Director of People Operations at Order. According to Karen, when people don’t have a good understanding of how their work can get them to the next level, you have a recipe for turnover.
Instead, you need to give team members clarity into what’s expected in their current role, what steps they need to take to get to the next level, and what that next role entails. Aligning those expectations to compensation can provide a transparent pathway to growth that keeps everyone at the company on the same page.
In her role as VP of People at Truework, Devin Blase took this transparency to the next level by not only providing visibility into what’s needed to get to the next level, but also sharing pay bands for each level.
Introducing pay bands in this way ensured better equity across the organization and market competitiveness, since each band was also based on external market rates.
Now is the time to dive into your people data to create an informed, responsible compensation plan. By doing so, you’ll not only prioritize your people, but also acknowledge their experience and efforts. What’s more, your organization as a whole will benefit from your detailed strategy and thoughtful transparency.
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